In the question given below there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options.

Assertion (A)- Acquisition of a foreign firm by ITC Ltd. will be recorded in the capital account of Balance of Payment.

Reason (R)- Capital account of BOP records all the transactions between the residents of the country and the rest of the world without causing a change in assets and liabilities of the residents of the country or its government.

(A) Is true but (R) is false.           

The correct answer is Option 3: (A) Is true but (R) is false.          
Assertion (A): Acquisition of a foreign firm by ITC Ltd. will be recorded in the capital account of Balance of Payment. This is true. When a domestic company like ITC Ltd. acquires a foreign firm, it is considered a foreign direct investment (FDI) and is recorded in the capital account of the Balance of Payments.

Reason (R): Capital account of BOP records all the transactions between the residents of the country and the rest of the world  without causing a change in assets and liabilities of the residents of the country or its government. This is false. The capital account actually records transactions that involve changes in the ownership of assets and liabilities between residents of the country and the rest of the world. These transactions do cause changes in assets and liabilities.